European shares headed for a sharp drop on Monday after Greeks rejected austerity measures

demanded in return of a debt deal.

Financial spreadbetters predicted Britain's FTSE 100 to open 106 to 140 points lower, or down as much as 2.1 per cent.Germany's DAX was seen falling 294 to 328 points, or as much as 3 per cent lower, and France's CAC 40 was seen slipping by 134 to 143 points, or down as much as 3 per cent.

Greek Finance Minister Yanis Varoufakis, whose forceful denunciations of creditors alienated many of his euro zone colleagues, resigned on Monday, saying Prime Minister Alexis Tsipras believed it would help smooth the path to a new aid deal.

With relations already frosty, Varoufakis infuriated Greece's European partners last week when he accused creditors of using "terrorism" against the Greek people to intimidate them into accepting more austerity.

In a statement, Varoufakis said he had been "made aware" that some members of the euro zone considered him unwelcome at meetings of finance ministers, "an idea the prime minister judged to be potentially helpful to him in reaching an agreement".

"For this reason I am leaving the ministry of finance today."

"I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday's referendum," Varoufakis said. "And I shall wear the creditors' loathing with pride."

French Finance Minister Michel Sapin says it is up to Greece to come up with an offer after the vote, hours before German Chancellor Angela Merkel heads to Paris for an emergency meeting with the French president.

"The basis of a dialogue is on the table, but it's up to Greece to show us that it takes the dialogue seriously and that it knows it can stay in the euro and that there are decisions to make," Sapin told Europe 1 radio Monday. He said the referendum clearly showed strong support for the Greek prime minister, but beyond that its consequences were not immediately clear.

France had no desire to see Greece leave Europe but Sapin insisted that the bloc would not be destabilized if that happened. "It's Greece that is in difficulty. Europe is not in difficulty -- Europe is facing a Greek difficulty."

Greece's employment minister is signaling a conciliatory tone in upcoming talks with European leaders, suggesting that leaving the eurozone would be the worst possible option for the beleaguered country.

Rania Antonopoulos told the BBC that there is still time to get a deal. With Greece's future hanging in the balance, the country is running out of cash and is at risk of a financial crash.

"There are still 48 hours, there is still this week," said Antonopoulos. "We will push as much as possible for an outcome, a result of these negotiations that does not obligate Greece to go in that direction."

Former Greek finance minister Yanis Varoufakis addresses the media as he arrives at the Finance Ministry in Athens after announcing his resignation on Monday, a day after Greeks delivered a resounding No to the conditions of a rescue package. (Jean-Paul Pelissier/Reuters)

As Europe's ultimate paymaster, German politicians are furious with Greece for its spendthrift ways and high-stakes referendum tactics. But, Don Murray writes, does Chancellor Angela Merkel want to go down as the woman who presided over Europe's breakup?

Dombrovskis, who is the executive branch's top official for the euro, said authorities are "able and willing to defend the financial stability" in the eurozone if it proves necessary in the aftermath of the referendum result.

"We have all the tools necessary to ensure the financial stability of the euro area," Dombrovskis told reporters in Brussels.

He noted that the market reactions "have been quite limited outside the situation on Greece."

Greek Prime Minister Alexis Tsipras has spoken on the telephone with German Chancellor Angela Merkel, a day after Greece overwhelmingly voted against recent creditor proposals and on the eve of an emergency eurozone leaders' summit.

A government official in Athens, who asked not to be named pending an official announcement, said Tsipras told Merkel that he would present Greece's proposals to restart talks with creditors at the Brussels meetings.

French President Francois Hollande welcomes German Chancellor Angela Merkel as she arrives at the Elysee Palace, the leaders meeting for talks on Greece in the aftermath of the referendum. (Etienne Laurent/European Photo Agency)

Greeks make history with a resounding NO to a final bail-out offer. Even as banks remain closed and the country's finances teeter on the brink. Now the focus returns to Europe as leaders prepare to make a wrenching decision that will define their union, and possibly break it apart.

The Netherlands' prime minister, Mark Rutte, said on Monday that Greece will have to accept deep reforms if it wants to remain in the euro zone.

In a debate in parliament in the wake of Greece's "No" vote on the terms of a bailout package from its creditors, Rutte said his government was unwilling to commit any more funds to Greece unless it committed to reform.